The data center sector in Southeast Asia has seen a boom in the last five years. Fueled by the rapid advancement and adoption of cloud computing and artificial intelligence (AI), 5G mobile technologies, increasing digital transformation and the Internet of Things (IoT), thriving e-commerce, and pursuing digital sovereignty, Malaysia has quickly emerged as a data center powerhouse hub.
Within Southeast Asia, Malaysia’s data center market is on a hockey-stick growth trajectory. Research and Markets forecasts Malaysia’s data center market to surge by 72% from 2022 to $2.25 billion in 2028, surpassing Southeast Asia’s overall growth rate of 47%. Key hubs such as Greater Kuala Lumpur and Johor Bahru are primed for significant expansion, hosting the bulk of the nation’s digital infrastructure. In fact, Johor, strategically located in southern Malaysia and directly adjacent to Singapore, is expected to attract RM17 billion ($4.9 billion) in new data center investments this year, according to the 1H2023 report by Malaysian property agency Zerin Properties.
Analysis by 451 Research shows that following the pandemic’s aftermath, the datacenter industry in Malaysia experienced a resurgence. Their research shows an anticipated surge in supply commencing in 2024, coinciding with the completion of construction projects across the country.
Emerging Data Center Powerhouse
Data center construction in Malaysia surged after Singapore, long considered the regional epicenter for data center activity, halted new developments in 2019 due to land and energy demands of these facilities. Malaysia is well-positioned to relieve regional capacity constraints with abundant land, a reliable power grid, connectivity to more than 20 international submarine cable systems, and growing interest from providers and hyperscalers. The country’s strategic location in the region, adjacent proximity to Singapore, and other favorable conditions have made it a compelling destination for data center investments.
- Unmatched greenfield opportunities: The surge in investments in Malaysia is linked to Singapore’s stricter criteria for data centers. The country’s ample land options and stable power supply, in contrast to Singapore’s rising energy costs and land constraints, make it an ideal destination for building an advanced digital infrastructure hub.
- Affordable land costs: The availability of lower-cost land adds to the region’s expansion potential. Malaysia provides competitively priced land parcels perfect for constructing sprawling hyperscale data center facilities. Combined with a supportive regulatory framework, this cost-effective land strengthens Malaysia’s appeal as a premier destination for data center ventures.
Access to renewable energy: The Malaysian government set targets under the Malaysia Renewable Energy Roadmap (MyRER) for renewable energy to account for 70% of the nation’s energy needs by 2050, aligning to achieve net-zero greenhouse gas emissions by 2050. Johor’s recent Green Deal mirrors initiatives by other states including Penang and Selangor, prioritizing swift enactment of Paris Agreement goals to limit global warming to 1.5 degrees Celsius. Inspired by global sustainability leaders, it targets five key areas: energy, transport, land use, nature and water, low-carbon cities, and industry, amplifying the state’s sustainability efforts. For data center providers aiming to reduce their environmental impact, access to a mix of energy sources, including natural gas, hydroelectric, and renewables will facilitate more sustainable operations. - Affordable costs to build and operate: As AI reshapes industries, data centers requiring immense power for high-performance computing are no exception. Malaysia’s industrial power tariffs at USD$0.10 per kilowatt-hour (kWh), offer a competitive edge over Singapore’s significantly higher rates of USD$0.27 per kWh. In addition, Malaysia offers a competitive construction cost of approx. USD$8 per Watt, according to Cushman and Wakefield’s 2023 / 2024 Asia Pacific Data Centre Construction Guide. These cost advantages, attributed to lower expenses in land, construction, and energy, could sway data center operators, especially those serving the burgeoning AI sector, to favor Malaysia for their facility locations.
- Connectivity for global reach: Malaysia’s robust connectivity infrastructure, featuring 20 international submarine cables (as of 2021), is poised for further expansion under the government’s digital economy blueprint. With a target to lead the Southeast Asia region in submarine cable landings by 2025, these additions promise enhanced bandwidth, reduced latency, and diversified routing. Leveraging these advanced telecommunications and extensive fiber-optic networks, Malaysia will benefit from efficient domestic and global connectivity.
Artificial Intelligence Reshaping Economies
The growing use of AI across various industries is driving demand for these large-scale campuses, which require power to drive their massive computing potential. Johor, with its abundance of land, reliable power grid, and commitment to renewable energy, is perfectly positioned as an attractive location for data centers that support the escalating computational needs of AI with high-density options while meeting sustainability goals.
As the data center industry continues to evolve, sustainable practices and zero pollution, high power efficiency combined with little to no water use, and access to renewable energy will be essential for Johor to maintain its edge as a data center hub. By embracing green technologies and fostering collaboration between the government, data center operators, and renewable energy providers, Johor can ensure a thriving and sustainable future for its data center industry.
EdgeConneX sites in Malaysia include the Central Business District, Cyberjaya, Bukit Jalil, and Johor. These areas collectively serve a fast-growing market for data center solutions in a rapidly expanding regional data center hub.
For more information on facilities in Malaysia, visit: https://edge.1.aordev.com/locations/asia-pacific/kl-malaysia/
In addition, EdgeConneX builds data center campuses worldwide, tailored to customer needs, prioritizing land, power, and connectivity.
For more information on Build-To-Suit data centers, visit: https://edge.1.aordev.com/data-centers/build-to-order/